12-31-2025 
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JPMorgan (NASDAQ: JPM) has predicted that stablecoins will reach a market capitalization of $600 billion by 2028, significantly reducing ambitious trillion-dollar forecasts from its peers.
In a recent report, analysts led by Managing Director Nikolaos Panigirtzoglou noted that stablecoin growth remains tied to the overall digital currency market’s expansion. These fiat-pegged tokens are still primarily used in digital currency trading circles, rather than in payments, as has been widely believed. As such, their market cap is most likely going to track the digital currency market’s, not outgrow it. Currently, the digital currency industry’s combined market cap stands around $3 trillion.
“The stablecoin universe is likely to continue to grow over the coming years broadly in line with the overall crypto market cap, perhaps reaching $500 billion–$600 billion by 2028, far lower than the most optimistic expectations of $2 trillion–$4 trillion,” they wrote.
This year, the stablecoin market cap shot up 50% to hit $320 billion. Tether and Circle (NASDAQ: CRCL) accounted for the majority of the growth—$48 billion and $34 billion, respectively.
But despite the explosive growth, demand in real-world payments played a small role, JPMorgan says. For instance, derivatives exchanges boosted their stablecoin holdings by $20 billion this year as demand for perpetual futures skyrocketed.
The lofty stablecoin projections by heavyweights like Citi (NASDAQ: C) and Standard Chartered (NASDAQ: SCBFF)—$4 trillion and $2 trillion, respectively—would still be overstated even in a scenario where these tokens become more common in payments, JPMorgan added. With payment instruments, the rate of circulation becomes more important than overall holdings.“For example, USDT’s annual velocity on the Ethereum blockchain is around 50. This implies that in a hypothetical scenario where stablecoins facilitate 5% (or around $10 trillion) of global cross-border payments volume annually, the required stablecoin stock would only be $200 billion,” the analysts wrote.
While JPMorgan undercut the stablecoin projections, its Wall Street peers are not taking any chances. Earlier this year, reports emerged that Citi, Bank of America (NASDAQ: BAC), Wells Fargo (NASDAQ: WFC), and other major U.S. commercial lenders were banding together to launch a common stablecoin that protects their interests against ‘crypto’ advancements.
The biggest opportunity for banks lies in tokenized deposits, not stablecoins, according to JPMorgan analysts. The bank launched its JPM Coin deposit token earlier this year for round-the-clock settlement and cross-border payments.
This month, its $4 trillion asset management division launched a tokenized money market fund. Investors will receive tokens that represent their ownership in the fund, which they can easily sell digitally, making the fund more liquid than its traditional peers.
Watch | Cut Costs & Streamline Payments: The Case for Stablecoins
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